Gov’t earning hefty sum from sin

The amount of taxes from tobacco, liquor and gambling has risen dramatically in recent years, led by a sharp rise in tax revenue from cigarettes, government data showed Wednesday.

On Jan. 1, 2015, the government increased taxes on cigarettes by 2,000 won ($1.70) per pack, raising the price to 4,500 won.

The following year, health authorities required tobacco companies to place graphic images showing the harmful effects of smoking on the upper part of cigarette packs as part of efforts to discourage smoking.

As a result, the total amount of sin tax revenue surged to 18.5 trillion won ($16.3 billion) last year from 15.9 trillion won in 2015, according to figures provided by the National Tax Service and other government agencies.

Sin tax revenue was 11.2 trillion won in 2012, 11.3 trillion won in 2013 and 11.9 trillion won in 2014.

Taxes on cigarettes more than doubled to 12.3 trillion won last year, compared to 5.9 trillion won in 2012, and accounted for 66.5 percent of all sin taxes. Taxes on alcohol came in second at 4.4 trillion won, followed by taxes on gambling at 174.2 billion won.

When broken down, the taxes on gambling include 139.9 billion won from casinos, 27.4 billion won from horse racing and 6.9 billion won from boat racing.

The government also collected 1.5 trillion won in revenue from lottery sales.

The sin tax amount is likely to climb further in the coming years as the government is set to raise taxes on electronic cigarettes next month.

The National Assembly’s Strategy and Finance Committee passed a bill earlier this month to raise the consumption tax on tobacco sticks used in electronic devices like Phillip Morris’ IQOS and British American Tobacco’s Glo to about 90 percent, similar to the level of conventional cigarettes. E-cigarette sticks are currently taxed at 50 percent.

The bill is expected to pass through the National Assembly next month.

Phillip Morris’ IQOS sticks currently sell for 4,300 won ($3.8) per pack, including a 1,739.6 won tax. Conventional cigarettes go for 4,500 won a pack, including a 3,323.4 won tax.

Rep. Kim Gwang-lim, a lawmaker in the opposition Liberty Korea Party who serves on the Strategy and Finance Committee, argued that electronic cigarettes should be taxed like conventional cigarettes because they use the same tobacco and emit vapors that are similar to the harmful smoke released by conventional cigarettes.

Yonhap